[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                    THE WORLD BANK AND MULTILATERAL
                    DEVELOPMENT BANKS' AUTHORIZATION

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

                         INTERNATIONAL MONETARY

                            POLICY AND TRADE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 4, 2011

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 112-68








                                _____

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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                   SPENCER BACHUS, Alabama, Chairman

JEB HENSARLING, Texas, Vice          BARNEY FRANK, Massachusetts, 
    Chairman                             Ranking Member
PETER T. KING, New York              MAXINE WATERS, California
EDWARD R. ROYCE, California          CAROLYN B. MALONEY, New York
FRANK D. LUCAS, Oklahoma             LUIS V. GUTIERREZ, Illinois
RON PAUL, Texas                      NYDIA M. VELAZQUEZ, New York
DONALD A. MANZULLO, Illinois         MELVIN L. WATT, North Carolina
WALTER B. JONES, North Carolina      GARY L. ACKERMAN, New York
JUDY BIGGERT, Illinois               BRAD SHERMAN, California
GARY G. MILLER, California           GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
JOHN CAMPBELL, California            JOE BACA, California
MICHELE BACHMANN, Minnesota          STEPHEN F. LYNCH, Massachusetts
THADDEUS G. McCOTTER, Michigan       BRAD MILLER, North Carolina
KEVIN McCARTHY, California           DAVID SCOTT, Georgia
STEVAN PEARCE, New Mexico            AL GREEN, Texas
BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri
MICHAEL G. FITZPATRICK,              GWEN MOORE, Wisconsin
    Pennsylvania                     KEITH ELLISON, Minnesota
LYNN A. WESTMORELAND, Georgia        ED PERLMUTTER, Colorado
BLAINE LUETKEMEYER, Missouri         JOE DONNELLY, Indiana
BILL HUIZENGA, Michigan              ANDRE CARSON, Indiana
SEAN P. DUFFY, Wisconsin             JAMES A. HIMES, Connecticut
NAN A. S. HAYWORTH, New York         GARY C. PETERS, Michigan
JAMES B. RENACCI, Ohio               JOHN C. CARNEY, Jr., Delaware
ROBERT HURT, Virginia
ROBERT J. DOLD, Illinois
DAVID SCHWEIKERT, Arizona
MICHAEL G. GRIMM, New York
FRANCISCO ``QUICO'' CANSECO, Texas
STEVE STIVERS, Ohio
STEPHEN LEE FINCHER, Tennessee

                   Larry C. Lavender, Chief of Staff
        Subcommittee on International Monetary Policy and Trade

                  GARY G. MILLER, California, Chairman

ROBERT J. DOLD, Illinois, Vice       CAROLYN McCARTHY, New York, 
    Chairman                             Ranking Member
RON PAUL, Texas                      GWEN MOORE, Wisconsin
DONALD A. MANZULLO, Illinois         ANDRE CARSON, Indiana
JOHN CAMPBELL, California            DAVID SCOTT, Georgia
MICHELE BACHMANN, Minnesota          ED PERLMUTTER, Colorado
THADDEUS G. McCOTTER, Michigan       JOE DONNELLY, Indiana
BILL HUIZENGA, Michigan









                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    October 4, 2011..............................................     1
Appendix:
    October 4, 2011..............................................    29

                               WITNESSES
                        Tuesday, October 4, 2011

Debevoise, Hon. Eli Whitney II, former U.S. Executive Director, 
  The World Bank Group; and Senior Partner, Arnold & Porter LLP..    10
Green, Hon. Mark, former U.S. Ambassador to Tanzania; former U.S. 
  Representative (R-WI); and Senior Director, U.S. Global 
  Leadership Coalition (USGLC)...................................     8
Murphy, John, Vice President for International Affairs, U.S. 
  Chamber of Commerce............................................    15
Runde, Daniel F., Schreyer Chair in Global Analysis; and Co-
  Director of the Project on U.S. Leadership in Development, 
  Center for Strategic and International Studies (CSIS)..........    12

                                APPENDIX

Prepared statements:
    Debevoise, Hon. Eli Whitney II...............................    30
    Green, Hon. Mark.............................................    37
    Murphy, John.................................................    44
    Runde, Daniel F..............................................    50

              Additional Material Submitted for the Record

Miller, Hon. Gary:
    Letter from the Bretton Woods Committee to Speaker Boehner 
      and Majority Leader Reid, dated October 4, 2011............    57

 
                    THE WORLD BANK AND MULTILATERAL
                    DEVELOPMENT BANKS' AUTHORIZATION

                              ----------                              


                        Tuesday, October 4, 2011

             U.S. House of Representatives,
                      Subcommittee on International
                         Monetary Policy and Trade,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:27 p.m., in 
room 2128, Rayburn House Office Building, Hon. Gary Miller 
[chairman of the subcommittee] presiding.
    Members present: Representatives Miller of California, 
Dold, McCotter, Huizenga; McCarthy of New York, Moore, Carson, 
and Scott.
    Ex officio present: Representative Frank.
    Also present: Representative Al Green of Texas.
    Chairman Miller of California. The committee is called to 
order.
    Today's hearing will be on the World Bank and multilateral 
development banks' authorization.
    We are going to limit each side to 10 minutes, as agreed to 
with the ranking member previously. At this point, I yield 
myself as much time as I may consume.
    We meet today to examine a discussion draft legislation to 
authorize general capital increases for the International Bank 
for Reconstruction and Development (IBRD), the Inter-American 
Development Bank (IDB), the African Development Bank (AfDB), 
and the European Bank of Reconstruction and Development (EBRD).
    The Treasury Department has requested authorization for the 
United States to make capital increase payments in order to 
maintain American leadership at these multilateral development 
banks (MDBs), which is important to U.S economic and national 
security. However, if the United States does not increase its 
capital stock at the banks, then the United States could lose 
its leadership position.
    This is the fourth hearing in our subcommittee's 
consideration of these authorization requests. At our first 
hearing, we looked at the leadership role of the United States 
at the MDBs. Under Secretary Brainard testified that having a 
leadership position at the MDBs can influence bank policy 
decisions and, in some cases, can provide veto power over the 
decisions. If we do not authorize and fund these requests, the 
U.S. share will diminish, impacting our leadership and 
influence at these institutions.
    Our second hearing focused on the impact of MDBs on U.S. 
job creation. We learned about the ways in which MDBs' 
financing helped open developing markets, which can spur 
private-sector economic growth and employment in the United 
States.
    Our third hearing focused on how the World Bank and MDBs' 
assistance to middle-income and poor countries around the world 
contributes to U.S. national security. We learned about how 
MDBs' assistance helped developing countries become stable 
nations that can counteract the proliferation of terrorism and 
other threats to the United States.
    Today's hearing considers a discussion draft of the 
Administration's request for authorization for the general 
capital increases. As we review this discussion draft today, 
our focus will be on the consequence of any reduction or delay 
in meeting the U.S. commitment to the MDBs; the impact of U.S. 
leadership at the MDBs, ensuring that investment help to 
safeguard national and economic security; and specific policy 
directives or conditions that should be included or amended in 
the authorization legislation to ensure U.S. national and 
economic security.
    This hearing process has been an important one so that our 
subcommittee fully understands the role and impact of the MDBs 
on U.S. economic and national security. While the hearing 
leaves little doubt about how critical it is for the United 
States to move forward on schedule with the capital increases, 
I know the discussion draft causes some of my colleagues pause, 
because these authorizations come at a time when we are all 
focused on getting our own massive debt under control.
    These are the first capital increases we have had to 
consider in almost 2 decades. Our series of hearings on the 
Administration's request were intended to help Members assess 
the benefit of the MDBs, given the current fiscal challenges 
that are facing Congress.
    This hearing illustrates that U.S leadership at these 
institutions is of critical importance. The MDBs are vital to 
addressing the world's most pressing economic and national 
security challenges. At a time when we are worried about fiscal 
constraints, I would argue that the ability of these 
institutions to leverage limited resources is exactly what we 
need to do.
    Bilateral foreign assistance is under significant strain 
right now. The MDBs can alleviate this strain by pooling our 
resources with others to fund the most pressing development and 
national security needs. For example, every $1 the U.S. 
contributes to the IBRD as a part of the general capital 
increase will result in $30 in development lending. At the 
African Development Bank, every U.S. dollar yields more than 
$70 in lending.
    This approach makes financial sense. And with U.S. 
leadership at these institutions, we can ensure that their 
development support is aligned with U.S. interests. So while we 
are considering a discussion draft that contains authorization 
for spending, I would argue that this is a fiscally responsible 
approach to meeting our Nation's economic and national security 
interests.
    This discussion draft contains a funding authorization as 
requested by the Administration. Prior to the subcommittee 
markup, we intend to include policy directives for the U.S. 
executive directors at these banks to ensure that these 
institutions have strong safety and soundness measures, 
procurement and anti-corruption safeguards, and transparent 
processes.
    I look forward to working with the subcommittee members as 
we formulate these directives so that we can ensure that banks 
are well-managed, effective, and focused on priorities that 
will lead to security and economic stability around the globe.
    If the United States does not make these capital increases, 
the implications are serious. This is a difficult issue because 
a critical mission that the MDBs perform--promoting peace and 
stability--is not at the forefront of our constituents' minds. 
The MDBs help foster U.S. national and economic security 
because we have a leadership role at these institutions.
    While we face critical fiscal choices right now, we cannot 
cede ground to other countries like China who are eager to 
replace us as leaders in all these institutions. If we do not 
lead, others will. They will set the agenda and priorities at 
the MDBs. I know our witnesses today plan to discuss these 
consequences, and I look forward to the hearing.
    At this point, I have 5 minutes to yield, and the ranking 
member has yielded that to former Chairman Frank.
    Mr. Frank. Thank you, Mr. Chairman. I won't take the whole 
5 minutes.
    I appreciate the way in which you and the gentlewoman from 
New York, the ranking member, have worked together here. This 
should not be--there are matters that are legitimately partisan 
where the parties and the ideologies legitimately differ. I 
don't believe this is one of them. This is a matter of clear 
national interest that has had a strong bipartisan element. The 
president of the World Bank is, of course, a former high-
ranking official of several Republican Administrations, Mr. 
Zoellick. And it is one of the areas, I think, in which there 
has been the greatest continuity in American foreign policy, 
which is very important. You can't do economic development like 
a yo-yo.
    This is about the most cost-effective way we can spend our 
dollars. CBO does a very good job of pointing out that while we 
vote what looks like large sums, if you look at the actual 
budgetary impact on the United States, they are really quite 
small. It also gives us a way to have, frankly, a lot of 
influence with a little bit of cover. There is often resentment 
of America's role in the world--often unfair, generally unfair, 
in my view. In this case, we get a multilateral set of clothes 
to wear while we are still able to pursue goals that we would 
probably have pursued otherwise, and I don't think there is 
anything illegitimate about that.
    Much of what needs to be done here is to tell countries 
what to do when they might not want to do it. And if the United 
States were to do that unilaterally, that would be a problem. 
Doing it in the role of a multilateral institution is helpful.
    There was a time when that was being abused. I do think 
some of the multilateral institutions, 20 years ago and more, 
had an excessively rigid view, a one-size-fits-all approach to 
economies. That has been replaced by a great deal of 
flexibility. I think we now have instruments that are 
important, that help implement reasonable policies, that show 
flexibility.
    And there is more, I think, of an understanding that you 
can discredit democracy. In many of these cases over the years, 
we were trying both to promote economic development and 
democracy, as people evolved from non-democratic regimes. And 
in too many cases, I think people were given the idea in some 
of these countries that democracy meant pain, it meant paying 
more for your water, it meant a whole lot of things that they 
weren't necessarily crazy about, and that didn't do democracy 
any good. That doesn't mean you retreat from these rational 
proposals, but you do them in a better way.
    So I again say that you, Mr. Chairman, and the ranking 
member have worked very well on this. I know there have been 
conversations with our colleagues on the Appropriations 
Committee. I would hope this committee could go forward. And, 
as I said, I have been here since 1980. I can't remember a 
President, a Secretary of State, or a Secretary of the Treasury 
of any party who was not an enthusiastic supporter of our 
participation in this. And I would hope that would carry over 
today.
    Thank you.
    Chairman Miller of California. I yield the balance of our 
time to Vice Chairman Dold.
    Mr. Dold. Thank you, Mr. Chairman. I want to thank you for 
holding this important hearing on authorizing general capital 
increases for the multilateral development banks as well as for 
holding our previous hearings on the MDBs. And I certainly echo 
the ranking member of the full committee's thoughts with regard 
to a bipartisan approach. I think this is certainly an 
important task.
    The Obama Administration has asked Congress to maintain 
America's MDB leadership by authorizing the multilateral 
development banks' general capital increases. And, in response, 
we have held several hearings to explore MDB funding 
requirements, necessary MDB improvements, the benefits of 
America's MDB leadership, and the costs that we would incur if 
we were to abdicate the MDB leadership to countries like China 
or other countries that might not share all of our national 
interests.
    Those earlier hearings demonstrated that America's MDB 
leadership gives the United States meaningful influence over 
the multilateral development banks' policies and practices 
while also improving clear domestic economic benefits and 
national security benefits.
    As many of our business leaders have told us, our MDB 
leadership promotes domestic economic prosperity and domestic 
job growth by contributing to political and economic stability 
around the world and by helping to open foreign markets to 
United States companies. By doing so, the MDBs are contributing 
to the next generation of consumer market countries, to their 
benefit and to America's benefit as well. In fact, over the 
last decade, U.S. businesses and individuals received nearly 
2,500 procurement contracts with the World Bank Group, totaling 
over $1.6 billion.
    In addition to our business leaders explaining the domestic 
economic benefits, many of our military and national security 
leaders have testified or written in support of fully funding 
our MDB contributions. According to those leaders, the MDBs are 
a critical component of our national security strategies. By 
helping stabilize vulnerable nations, our MDBs help them to 
counteract terrorism and weapons proliferation and other 
threats to the United States, while also influencing their 
policies in ways that have a positive impact on our own 
national security interest.
    And we receive all of these economic and national security 
benefits at a very small contribution, while also leveraging 
multiples of that cost in the form of contributions from other 
countries, private-sector investments, and loan repayments.
    As I have said many times before, all of us can do a better 
job of communicating how little we are actually paying for 
these substantial economic and national security benefits. The 
reality is that we cannot have meaningful impact on our 
deficits or national debt by abdicating our MDB leadership to 
China and other nations that don't necessarily share our 
national interest.
    While I support maintaining our MDB leadership, we all 
understand that the MDBs aren't always perfect and that there 
are always opportunities for improvement. I am pleased that the 
appropriate Administration officials have been responsive to 
improvement suggestions. For example, I was pleased to hear 
that Assistant Treasury Secretary Lago announced at our last 
hearing that the United States would generally vote against 
Argentina projects until Argentina begins to comply with its 
international agreements and obligations.
    I know I have gone over my time, Mr. Chairman, so I yield 
back.
    Chairman Miller of California. No, you actually have--you 
had 2 minutes that wasn't recognized on the clock. There was a 
mistake. You have time.
    Mr. Dold. Oh, fantastic. Thank you. I am going to continue 
then, if I may.
    I believe that we also must ensure that we have strong 
anti-corruption policies and systems, sound financing 
practices, strong procurement safeguards, thoughtful 
environmental considerations, and general transparency.
    So I look forward to hearing from our witnesses today about 
all of these topics and about the discussion draft that has 
resulted from our previous hearings. I do believe that this is 
an important topic. It is of vital national security interest 
as well as economic interest for our country. It is one of 
those things that, I am pleased to say, has broad bipartisan 
support, and I certainly look forward to working with my 
colleagues on the other side of the aisle to move this forward 
swiftly.
    And with that, Mr. Chairman, I yield back.
    Chairman Miller of California. Thank you.
    Mr. Carson is recognized for 2 minutes.
    Mr. Carson. Thank you, Mr. Chairman, for holding this very 
important hearing.
    Multilateral development banks provide the assistance 
needed in developing countries that helps sustain and further 
promote economic and social development. This hearing is 
timely. We will be discussing the authorization and 
appropriation of measures for capital increases for MDBs, 
including the World Bank, at a time when our Nation is facing 
huge economic challenges. And as we make difficult funding 
choices, it is very critical that we not forgot how 
international aid is closely linked to our own economic 
development. This funding shores up export markets, promotes 
economic development and good governance, and it is a critical 
tool in our national security.
    I agree, it is important to examine the effects of total 
foreign aid provided to developing countries, including both 
bilateral aid and multilateral aid. We should continue to 
change our focus from getting money out the door to developing 
countries to delivering services to developing countries. We 
also need to engage in long-term activities, like the 
evaluation of projects after they are completed. We should 
continue to focus on building transparency of operating costs 
and how aid money is spent.
    This aid does serve vital economic and political functions. 
With one in four people in the developing world living on less 
than $1.25 a day, rescinding assistance is simply not an 
option.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Chairman Miller of California. Thank you.
    Mr. Scott, you are recognized for 3 minutes.
    Mr. Scott. Thank you very much, Mr. Chairman.
    This is indeed a very, very important hearing, and I am 
delighted that our chairman has chosen to hold it.
    I think a fundamental question we have to ask ourselves up 
front, though, is, how effective would this debt relief be in 
helping to alleviate poverty and promoting growth long-term in 
the developing countries where ruling governments are believed 
to be suffering from rampant corruption and nepotism, which is 
very real? So I think as we approach this, we have to examine, 
what impact does this corruption, does all of this have? And, 
in those cases, what would be an effective solution as we go 
forward?
    And as we continue to discuss the importance of 
multilateral development banks, we have to ensure that the 
critical needs of certain nations are met in order to better 
guarantee economic development and, thus, to give some 
stability to these societies and their communities. Greater 
access to capital will certainly allow certain countries to 
improve the quality of life of its citizens by means of 
improvement or even the initial establishment of some very, 
very simple cases--in infrastructure systems, like electricity, 
running water, things we basically take for granted in our 
country.
    The general capital increases as proposed in the discussion 
draft before this subcommittee today are certainly a good 
start. And since the MDBs significantly increased their lending 
following the 2008 financial crisis, many of these 
organizations are in need of new funding. The discussion draft 
would satisfy this requirement to fill emptied accounts and 
would enable developing countries to take full advantage of the 
opportunities provided them.
    However, we should view the authorization and appropriation 
of the MDBs as an opportunity to promote reform for these 
institutions and have some understanding of the depth of the 
corruption and the nepotism that is rampant in many of these 
countries. Many developing countries have accumulated debt as a 
result of irresponsible borrowing and lending practices and, at 
times, caused by leaders' pursuit of political influence, 
often--very often--at the expense of the nation's very own 
citizens.
    To avoid such consequences, guidelines are very much needed 
to ensure the approval of responsible loans, namely 
accountability and transparency and appropriate evaluations of 
financial impact. But this type of oversight would resemble 
very much what our full committee passed in the form of the 
Dodd-Frank financial reform last year. And it is needed to 
ensure that nations actually benefit from any degree of debt 
relief. That is critical and should be the bottom line.
    So I look forward to our discussion, Mr. Chairman. Thank 
you very much.
    Chairman Miller of California. Thank you.
    I would like to welcome our panel today. We are going to 
introduce you a little out of order. Ms. Moore would like to 
introduce Mr. Mark Green.
    First, the Honorable Eli Whitney Debevoise was the U.S. 
executive director of the World Bank Group from 2007 to 2009 
and is currently a partner at the law firm Arnold & Porter. 
While serving as the U.S. executive director, Mr. Debevoise had 
a leading role in capital increases and share realignment 
negotiations and participated in preparation for G8 and G20 
summits. He is also the great grandson of Eli Whitney, the 
inventor of the cotton gin.
    Welcome.
    Mr. Daniel F. Runde holds the William A. Schreyer Chair in 
Global Analysis and is co-director of the Project on Prosperity 
and Development at the Center for Strategic and International 
Studies, CSIS. Prior to joining CSIS, Mr. Runde was the head of 
the foundation unit at the International Finance Corporation of 
the World Bank Group. Before that, he served at USAID as the 
director of the Office of Global Development Alliance. In 
September 2010, Mr. Runde was named as one of 40 under 40 in 
international development in Washington, D.C., by Devex Group.
    Mr. John Murphy is the vice president of the International 
Division of the U.S. Chamber of Commerce. Mr. Murphy played a 
key role in the Chamber's work relating to protection of 
intellectual property, global regulatory cooperation, trade 
facilitation, and the World Trade Organization's Doha 
development agenda negotiations.
    Mr. Murphy, we are glad you are here today to represent the 
Chamber.
    At this point, I will turn it over to Ms. Moore.
    Ms. Moore. Thank you so much, Mr. Chairman. And I want to 
join my other colleagues in thanking you for calling this 
hearing today on this very important subject.
    It is really my pleasure to introduce our former colleague, 
Ambassador Mark Green, who served in the House of 
Representatives from 1999 to 2007. But I also served with him 
in the Wisconsin State legislature. He served in the House, and 
I had moved on to the Senate. And he had a very keen, sterling 
understanding of economics at that time. So, at a time when we 
were making strategic investments in Wisconsin, I would offer 
legislation in the State Senate and call him up and beg him to, 
please, don't let the Democrats mess up my legislation and to 
baby-sit it for me. So I really, really appreciated working 
with him on a bipartisan basis back then.
    He came along to Congress and served from 1999 to 2007. And 
he served on the Judiciary Committee and the International 
Relations Committee. He does have a J.D. from the University of 
Wisconsin-Madison, so he is a well-educated lawyer.
    At that time, he really, Mr. Chairman, I am reflecting on 
your opening comments where you talked about the security 
component in this legislation, the economic stability and 
promoting peace and stability and not being preempted by other 
countries. And he certainly developed an expertise in 
international affairs during his tenure here in the House of 
Representatives. He put together innovative foreign policy 
initiatives, helped craft the Millennium Challenge Act; the 
Global Access to HIV-AIDS Prevention, Awareness, and Treatment 
Act of 2001; and the U.S. Leadership Against HIV-AIDS, 
Tuberculosis, and Malaria Act.
    After his service here, he became the Ambassador to 
Tanzania, overseeing the largest Millennium Challenge compact 
that we have had and significant PEPFAR programs. He has been 
the managing director of the Malaria No More Policy Center in 
Washington and is on the current board of the Millennium 
Challenge Corporation.
    He is a family man, married with kids. And he certainly 
does get it, the importance of this initiative. And I do 
welcome Ambassador Mark Green here today.
    Chairman Miller of California. I would like to welcome each 
of you.
    Without objection, your written statements will be made a 
part of the record. You will each be recognized for a 5-minute 
summary.
    And, Ambassador Green, you and I were classmates in 1998, 
and it is good to have you back. You are recognized, Mr. Green.

 STATEMENT OF THE HONORABLE MARK GREEN, FORMER U.S. AMBASSADOR 
  TO TANZANIA; FORMER U.S. REPRESENTATIVE (R-WI); AND SENIOR 
       DIRECTOR, U.S. GLOBAL LEADERSHIP COALITION (USGLC)

    Mr. Mark Green. Thank you, Mr. Chairman, Ranking Member 
McCarthy, my friend and former colleague, Congresswoman Moore, 
and all the members of the subcommittee. It is an honor to 
appear before you here today to discuss the importance of the 
multilateral development banks and America's international 
affairs programs from a national security perspective.
    I am here today in my capacity as a former ambassador and 
as senior director with the U.S. Global Leadership Coalition. 
USGLC is often called the ``strange bedfellows coalition'' 
because it is comprised of both American businesses like 
Boeing, Caterpillar, Wal-Mart, Land O'Lakes, and the U.S. 
Chamber of Commerce, but also leading humanitarian NGOs--CARE, 
World Vision, Catholic Relief, and Bread for the World. We 
bring together bipartisan military, business, faith-based, and 
community leaders from all across the country who are united in 
the belief that even though all of these programs only 
constitute about 1 percent of our Federal budget, these 
programs are vitally important for America's national security 
and economic growth, as well as our values.
    It goes without saying that our Nation is facing lots of 
fiscal challenges. As a former member of this committee, I know 
very well that you have tough choices to make in coming months. 
I also know that most Americans aren't really aware of the 
critical mission that the World Bank and other MDBs perform, 
and this puts even more political pressure on all of you for 
the funding requests and the legislative requests that you 
receive.
    My view, respectfully, is that support for these 
institutions is simply part of our Nation's leadership 
obligations. These obligations help so many of our friends and 
allies in need and, as I hope this hearing will show, they help 
us, the United States, the American people.
    The world has changed dramatically, obviously, over these 
last few decades. Cold war threats have now been replaced by 
terrorism, pandemics, weak and failing states, and a number of 
growing strategic challenges, strategic competitors to America 
in the global arena. Our national security today is not only 
dependent upon the strong deterrent effect of a robust military 
but, quite frankly, also in a wide range of investments in our 
diplomatic and development tools. In addition to important 
programs that the United States oversees through USAID and 
other agencies, the MDBs provide a source of funding that aids 
in economic growth, and that, in turn, helps with stability and 
with peace.
    Investing in development enhances our national security by 
preventing conflicts before they require costly military 
action. As former Secretary of State Condoleezza Rice has said, 
``We must now use our foreign assistance to help prevent future 
Afghanistans and to make America and the world safer.''
    Former Secretary of Defense Bob Gates commented last year, 
``Development contributes to stability. It contributes to 
better governance. And if you are able to do those things and 
do them in a focused and sustainable way, then it just may be 
unnecessary for us to send in soldiers.'' He summed it up best 
by adding, simply, ``Development is a lot cheaper than sending 
soldiers.''
    My personal view and the view of the USGLC membership is 
that security in these challenging, ever-changing times means 
that our leaders must have all of the tools of power--hard 
power and soft power, military and civilian. And that includes 
important tools of development and diplomacy, bilateral and 
multilateral. The programs of the World Bank and the MDBs are a 
crucial tool in that toolbox.
    Withholding or cutting back U.S. contributions would not 
only limit the amount of capital available to them for carrying 
out their key missions, but it would risk diminishing our 
influence around the world. It risks ceding leadership to other 
countries, including rising powers like China that offer 
alternative funding sources for development.
    I think it is very important to realize that, as developing 
nations emerge, history shows they tend to reflect the values, 
the structures, the institutions, and the cultures of those 
that helped them. You don't have to go back very far in 
history. You can look at South Korea and the extraordinary 
challenges that nation was facing 50 years ago, and the support 
that they received through the World Bank, which they have 
largely repaid. They have now become not only one of our 
crucial trading partners but one of our great military 
partners. And the work that they have done to help us make sure 
that the world is safe and more stable, particularly in that 
part of the world, quite frankly, it is invaluable, it is 
irreplaceable.
    So we face lots of challenges. We face lots of fiscal 
challenges. We all know that they are there. And every agency, 
every institution must tighten its belt and scrutinize every 
program. But I think the great risk that we all see out there 
is, if the United States were to walk away from these 
institutions, there would be no way the world could be a better 
place. Clearly, we would be diminishing our own influence. And 
the world, simply put, is a better place when America is 
engaged, when America is strong, and when our leaders--past 
Administrations, current Administration, and future 
Administration--have all the tools in the toolbox.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Mark Green can be found on 
page 37 of the appendix.]
    Chairman Miller of California. Thank you, Mr. Green.
    I am going to be generous on time. We only have one panel 
today, and I think the testimony is very important to us.
    Mr. Debevoise, you are recognized for 5 minutes.

  STATEMENT OF THE HONORABLE ELI WHITNEY DEBEVOISE II, FORMER 
   U.S. EXECUTIVE DIRECTOR, THE WORLD BANK GROUP; AND SENIOR 
                  PARTNER, ARNOLD & PORTER LLP

    Mr. Debevoise. I thank you, Mr. Chairman.
    Chairman Miller, Ranking Member McCarthy, and distinguished 
members of the subcommittee, it is an honor to appear before 
the House Financial Services Committee's Subcommittee on 
International Monetary Policy and Trade regarding the 
authorization of capital increases for the World Bank and the 
other multilateral development banks.
    I would like to pause here for a minute just to emphasize 
that we are talking about banks, albeit development banks. And, 
certainly, they produce very tangible development results. The 
World Bank has just published a so-called ``Corporate 
Scorecard'' where you can see some of the concrete results, 
results that help us achieve the Millennium Development Goals, 
and specific results in countries, results in terms of teachers 
recruited and trained, children immunized, pregnant women 
receiving antenatal care, roads constructed, people provided 
with access to improved sanitation, transmission and 
distribution lines constructed or rehabilitated, areas with 
irrigation services. So this is a key development instrument we 
are talking about.
    But we are talking about replenishing the capital of the 
hard-loan windows of these banks. That is different from the 
soft-loan windows or IDA or the African Development Fund, which 
operate on the basis of triennial negotiations and annual 
appropriations. We are talking here about the hard-loan 
windows. And as has been mentioned already, requests for 
general capital are infrequent when we are talking about the 
hard-loan windows for these banks.
    Yet, we should also remember that 70 percent of the 
planet's poor, defined as living on $1.25 a day or less, live 
in the countries that are eligible for borrowing from the hard-
loan windows. To give you an example, in one country in South 
Asia today, there are 500 million people living without 
electricity--more people than the entire population of the 
United States living without electricity. And this is a country 
which is in transition from the soft-loan to the hard-loan 
area. So we need to keep the focus on what we are talking about 
with this specific legislation which is before you today.
    We also need to remember that we have been through a 
financial crisis. And I must say that, given the announcements 
that came out of last weekend's meetings right here in 
Washington, things aren't looking so good as we look over the 
horizon.
    The MDBs were asked to respond to the financial crisis the 
last time, and respond they did very strongly. The G20 asked 
them to find $250 billion so that, as we saved our banks and 
our population, the Europeans saved theirs, the poor people in 
the world were not forgotten. And the MDBs responded strongly, 
and that is, in fact, why we are here today. Because of the 
strength of that response, the capital of these institutions is 
depleted. And in the case of IBRD, for example, they will not 
be able to return to pre-crisis lending levels without more 
capital.
    We have heard a lot today about U.S. leadership. I think it 
is important to understand that our leadership manifests 
itself, in part, through our financial support. It also 
manifests itself through the quality of the ideas that we 
present for pursuit of the MDBs' economic growth and poverty-
reduction mission. We do not possess 50 percent of the votes in 
any of the MDBs, so we cannot unilaterally block any particular 
loan or impose any particular policy. Although the MDBs have a 
strong American presence, they are not U.S. Government agencies 
or U.S.-controlled entities, so we must use our diplomatic 
voice to secure the outcomes we desire. And I might say, we 
have a very good track record of success at doing that.
    But if we do not subscribe to these general capital 
increases, our ability to persuade others will be reduced. You 
can imagine the conversation with the executive director from 
one of the African constituencies when Burundi and Rwanda have 
contributed to this capital increase and we have not. I don't 
think the conversation would go very well. So we should not 
forfeit the position that we have.
    I am sure that Members will be curious to know what process 
was used to determine the need for the capital contributions 
and the level of their contributions. I have tried to describe 
this process in my written testimony.
    The key thing to understand is that these institutions are 
managed financially in a very conservative manner. And the 
United States is the strongest voice for that. We get 
tremendous leverage out of these capital investments. To give 
you an example, for the IBRD, the Administration request is for 
$117 million per year for the next 5 years, and we will get 30, 
40, 50 times leverage out of that money. There are countries 
for whom we give bilateral assistance annually that is 
multiples of the $117 million which is being requested for the 
IBRD.
    Finally, I should say that there are reforms accompanying 
these requests for capital increases, reforms that the United 
States has pushed hard for throughout the negotiation process, 
reforms in terms of greater focus on development results, a 
subject which was addressed in some detail in IDA negotiations 
in the past and is now going to be used in the hard-loan 
windows as well.
    Disclosure policy: There is a new disclosure policy where 
the presumption has been reserved. The presumption is now in 
favor of disclosure of documents, and only a short list of 
documents as exceptions, not the other way around.
    The institutional integrity units have been strengthened, 
and their performance is dramatically better. The inspection 
panel, which was an institution created at the instigation of 
the United States, the insistence of the United States, is now 
strong and vigorous. And the United States has been a stalwart 
defender of its independence.
    So these are just some examples of the reforms. There are 
others I could talk about.
    In conclusion, I would respectfully submit to this 
committee that it is time to move this authorization 
legislation for the World Bank and MDB capital increases, and 
it is the right decision for U.S. national and economic 
security. And we need to act now, as well, because inaction 
will result in forfeiture of our rights.
    So I commend these capital increases to you and thank you 
for your attention. I stand ready to answer any questions you 
may have. Thank you.
    [The prepared statement of Mr. Debevoise can be found on 
page 30 of the appendix.]
    Chairman Miller of California. Thank you very much.
    Mr. Runde, you are recognized for 5 minutes.

    STATEMENT OF DANIEL F. RUNDE, SCHREYER CHAIR IN GLOBAL 
ANALYSIS; AND CO-DIRECTOR OF THE PROJECT ON U.S. LEADERSHIP IN 
  DEVELOPMENT, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES 
                             (CSIS)

    Mr. Runde. Thank you, Chairman Miller, Ranking Member 
McCarthy, and members of the subcommittee.
    Chairman Miller of California. You might want to pull the 
microphone closer to you. We can't hear you.
    Mr. Runde. Okay. Thank you. Thank you very much. I have a 
loud voice, but this helps. Thank you.
    Thank you, Chairman Miller, Ranking Member McCarthy, and 
members of the subcommittee. I am honored to appear here today 
and to have the opportunity to testify on the general capital 
increase for the multilateral development banks and U.S. 
leadership in them.
    The bottom line is, walking away from the general capital 
increase is a downpayment on American decline.
    The Obama Administration has made a request to Congress for 
an extraordinary contribution to a number of the MDBs, the 
multilateral development banks. It is critical that Congress 
act on this request so that the United States can maintain its 
overwhelming influence over these institutions, ensure that we 
have strong multilateral funding partners for the many 
challenges we face, and also invest in our national security.
    I recognize that making this request for the so-called 
general capital increases comes at a very difficult time, but 
the costs of walking away are very high. Maintaining our de 
facto control over the MDBs through this contribution is a 
critical investment in America's national security because 
these institutions provide money and advice that, in 
fundamental ways, support our allies and U.S. national security 
objectives in places such as Afghanistan, Libya, Iraq, Haiti, 
Colombia, Tunisia, and Southern Sudan. They are our set of 
funders of a U.S. version of globalization. We are in 
competition with other powers offering their darker version of 
globalization.
    A strong set of MDBs under U.S. leadership is also a 
critical instrument for achieving victory in the long war. The 
MDBs offer an American operating system for countries who want 
to plug into the positive aspects of globalization, including 
free-market principles, a more open trade regime, and the rule 
of law.
    In order to maintain our current level of leadership and 
influence in these MDBs, the United States will need to 
continue to retain its own ownership stake. We are going to 
have to pay to play. If not, other countries will fill the void 
and step in to take these institutions in directions that we 
will not like.
    The MDBs export, as I said, an American operating system of 
globalization. These institutions are heavily influenced by the 
United States. All or most of the business is conducted in 
English. All or most of the senior leadership and leading 
technical experts have studied, worked, or lived here in the 
United States. The MDBs almost always conduct agreements under 
U.S. or U.K. law. And the export performance standards and 
practices perfected or used in the United States.
    Washington policymakers often overlook the fact that the 
MDBs enjoy a level of credibility in many country contexts that 
the United States simply does not enjoy. If the MDBs are 
recommending the same course of action that we are 
recommending, in some contexts it is more palatable and the 
policymaker in a foreign country is more willing to accept the 
advice from an MDB. They are an instrument of our economic and 
national security interests worldwide.
    If we do not authorize the recapitalization and 
replenishment of the MDBs, a number of very negative 
consequences will likely occur.
    First, at the World Bank, we risk losing our unique veto 
power. At the African Development Bank, we risk decreasing our 
shareholdings by two-thirds, which would jeopardize our only 
seat on the board of directors.
    Of particular concern is the Inter-American Development 
Bank. At the IDB, all funding from other states is contingent 
on whether or not the United States pays its contribution, as 
to whether or not the United States ponies up its contribution. 
If the United States does not authorize recapitalization of the 
IDB, all other donors would cut back, sending an incredibly 
negative signal to Latin America and creating a far less 
effective IDB. Specifically, the IDB lending will shrink from 
its current and target levels of approximately $10 billion to 
$12 billion to pre-crisis levels of $6 billion to $7 billion a 
year.
    Recovery and reconstruction efforts in Haiti would be 
directly impacted, with the real potential to destabilize a 
very fragile democracy, with significant national security 
implications to the United States. Approximately $2 billion of 
development funding for Haiti is at risk because the IDB has 
agreed to use $2 billion of its income for Haiti over the next 
decade.
    Shareholding in the various MDBs is distributed to reflect 
country contributions over many years. Shares that the United 
States does not pay for will ultimately be made available to 
other countries. And there is little doubt that they will be 
eaten up by countries with a different world view than us.
    In addition, because of our financial contributions in the 
past, we have enjoyed a preponderant role in these institutions 
by maintaining critical leadership posts: the World Bank 
presidency and other pivotal vice presidential posts at other 
institutions. In recent years, U.S. control of these roles has 
come under increased attack. By not participating fully in the 
general capital increase, we strengthen those who would like to 
see the United States lose these critical personnel posts.
    During the 2008-2009 financial crisis, the MDBs were asked 
by their shareholders, including the United States, to fire all 
their bullets as part of the crisis response. As a result, the 
recovery in developing countries was--the MDB softened the 
effects of the economic crisis and helped clear a path for the 
global economic recovery in developing countries.
    The way these institutions work is that they have a certain 
amount of shareholder capital from governments, including the 
United States, and the MDBs lend money against the shareholder 
capital. As you have heard from others, for every dollar 
provided by the United States, the World Bank lends $25 to 
developing countries. However, as a result of the financial 
crisis, most of the current shareholder capital is already 
spoken for through the loans that these institutions have made. 
If we want these institutions to continue to play a significant 
role in shaping the world around us in ways favorable to us, we 
need to ensure that they are able to lend at current levels.
    At the same time, U.S. foreign assistance, as well as that 
delivered by other donor countries, is coming under significant 
strain. As a consequence of the inevitable cuts in our 
bilateral foreign assistance budget, it is likely that the 
United States will stop providing foreign assistance 
bilaterally, primarily through USAID, to a large number of 
middle-income and lower-middle-income countries as we focus our 
limited dollars on the most pressing development and national-
security-focused countries. Well-financed MDBs under U.S. 
leadership need to be a part of a U.S. graduation strategy, 
filling in the gaps for the United States in middle-income 
countries.
    Just a couple of observations about the national security 
implications and why the United States is safer with strong 
MDBs.
    First, in situations where there is a conflict, such as 
Libya and Afghanistan, the United States needs to build up and 
support local institutions as quickly as possible and do so in 
a way where we burden-share with other donors. And the MBDs 
allow to us do that.
    Second, in situations where we are supporting newly formed 
governments, policymakers need expert advice to manage public 
money, set up health systems, regulate banking systems, and set 
up the rules of the game for basic services like electricity 
and water. The MDBs often have the best technical experts in 
the world on a wide range of issues, ensuring that a government 
actually functions.
    These institutions are far from perfect. In zones of 
conflict, they need to improve their flexibility, and they need 
to be willing to develop specialized cadres who can be deployed 
in some of the world's worst contexts. These institutions can 
be very slow, and these institutions need to change. But we 
minimize the chances that these institutions will improve the 
right way if we do not have a leading seat at the table. As I 
said earlier, walking away from the general capital increase is 
a downpayment on American decline.
    I thank you for the opportunity to testify before you 
today, and I welcome any questions you may have.
    [The prepared statement of Mr. Runde can be found on page 
50 of the appendix.]
    Chairman Miller of California. Thank you.
    Mr. Murphy, you are recognized for 5 minutes.

  STATEMENT OF JOHN MURPHY, VICE PRESIDENT FOR INTERNATIONAL 
               AFFAIRS, U.S. CHAMBER OF COMMERCE

    Mr. Murphy. Thank you, Chairman Miller, Ranking Member 
McCarthy, and distinguished members of the subcommittee. On 
behalf of the U.S. Chamber of Commerce, I am pleased to speak 
today about the importance of founding a robust international 
affairs budget in general and supporting the general capital 
increase for the World Bank and the other multilateral 
development banks in particular.
    No priority facing our Nation today is more important than 
putting Americans back to work. The biggest policy challenge we 
face is to create the 20 million jobs needed in this decade to 
replace the jobs lost in the recession and to meet the needs of 
our growing workforce. World trade and expanding U.S. access to 
global markets will play a vital role in reaching this goal.
    After all, outside our borders are markets that represent 
73 percent of the world's purchasing power, 87 percent of its 
economic growth, and 95 percent of it consumers. The resulting 
opportunities are immense. Already, one in three manufacturing 
jobs depends on exports, and one in three acres on American 
farms is planted for hungry consumers overseas.
    Nor is trade just for big companies. More than 97 percent 
of the quarter-million U.S. companies that export are small and 
midsized firms. And last year, more than half of all U.S. 
exports went to developing countries for the first time in a 
number of years.
    The international affairs budget plays a vital enabling 
role for U.S. companies to tap foreign markets and create jobs 
and prosperity at home. Although it represents less than 1.5 
percent of the total Federal budget, the international affairs 
budget is critical to creating jobs, saving lives, and 
protecting our national security. Within that, the Chamber 
strongly supports authorizing and appropriation measures for 
capital increases for the multilateral development banks.
    American businesses understand these institutions' vital 
role in fostering prosperity. The banks' loans and expertise 
help developing countries to become reliable trading partners 
and open up their markets for U.S. goods and services. These 
loans come with conditions, such as strengthening transparency, 
promoting good governance, and improving the investment 
climate.
    For example, in Ghana, a World Bank-funded project helped 
build a flyover bridge and a network of roads linking the 
country's economic hubs with existing routes, creating a 
multipurpose industrial park. The results included over 3,000 
investment projects valued at more than $12 billion and more 
than 300,000 new jobs. These investments and the accelerating 
pace of economic growth and development in Ghana powered a 
tripling in U.S. exports to Ghana over just the past 4 years. 
That sum sustains thousands of American jobs.
    Also, to facilitate cross-border trade, the World Bank has 
supported border modernization and trade facilitation 
initiatives with very favorable results. For example, a project 
covering Kenya, Uganda, and Rwanda has employed the one-stop 
border concept. The project has reduced the border clearance 
time for cargo at one post on the Kenya-Uganda border from an 
average of almost 2 days, 5 years ago, to an average of only 7 
hours today.
    It is also worth mentioning the critical role that the 
multilateral development banks played in addressing the 
shortage of trade finance that accompanied the recent financial 
crisis. That shortage of trade finance threatened to greatly 
add to the decline in world trade at the time and to exacerbate 
the recession that struck the United States and many other 
countries.
    In all of these cases, the United States plays a 
significant role in helping to shape these policies as the 
largest shareholder at the World Bank and the IDB and one of 
the largest at the others. As you have heard here today, 
failure to support the capital increase would undermine U.S. 
leadership and the ability to shape development priorities.
    I will skip over some of the things you have already heard.
    In addition, MDB loans generate many contract opportunities 
for U.S. firms and thousands of jobs here at home. The U.S. 
Chamber is mindful of the difficult financial circumstances 
facing our country. As the Chamber and more than 150 other 
business organizations wrote in a joint letter to Congress last 
week, the United States must find a way to stabilize its debt, 
reform entitlement programs, and comprehensively restructure 
the U.S. Tax Code.
    Achieving the necessary fiscal adjustment cannot be 
accomplished by abandoning more than a half a century of 
leadership in the multilateral development banks. Indeed, the 
capital increase for the banks is a small fraction of the 
international affairs budget, which, as I have said, is, 
itself, less than 1.5 percent of the total Federal budget.
    The United States cannot afford to sit on the sidelines 
while others seize leadership in the world economy, including 
at the multilateral development banks. We need to support this 
capital increase. At stake is the standing of the United States 
as the world's leading power, our ability to exert positive 
influence around the world, our reputation and our brand 
overseas, and our best hopes of escaping high unemployment here 
at home.
    The U.S. Chamber of Commerce looks forward to working with 
members of the subcommittee to secure approval of the general 
capital increases for the multilateral development banks.
    Thank you very much.
    [The prepared statement of Mr. Murphy can be found on page 
44 of the appendix.]
    Chairman Miller of California. I thank each of you for your 
testimony. It was very, very informative.
    Mr. Debevoise, some people mistakenly think capital 
increases, or GCIs, are foreign aid. Can you explain the 
difference between these GCIs and foreign aid? And what happens 
to the profits earned from these loans? Does that help offset 
what the United States has to spend on foreign aid?
    Mr. Debevoise. I thank you, Mr. Chairman.
    As I emphasized in my opening remarks, we are talking about 
the hard-loan windows of banks. So these are institutions that 
make loans at roughly market rates and they do generate 
profits. Annually, in each of the institutions, there is 
discussion about what to do with the profits. As in the 
management of any prudent bank, you set some aside for 
reserves; you put some in retained earnings so that the 
business could increase; and if there are things left over--in 
the case of the MDBs, money is currently being transferred to 
soft-loan windows.
    So, at the IBRD this last year, $520 million was allocated 
for transfer to IDA, which is the soft-loan window, thereby 
directly reducing the call on IDA contributors in that amount. 
There also can be transfers to special windows for crisis 
response situations, as well.
    Chairman Miller of California. So a normal call would be 
the amount being transferred, so it is really an offset; it is 
a benefit to us on that side?
    Mr. Debevoise. Right. The amount being transferred, if you 
will, reduces the amount that the United States and other 
donors to IDA would otherwise be asked to contribute on an 
annual basis.
    Chairman Miller of California. Great. Thank you.
    Mr. Green, if the United States does not contribute to the 
GCIs, what are the potential risks to our national security? 
And how do MDBs break the cycle of conflict and insecurity in 
unstable countries?
    Mr. Mark Green. I think the best way of thinking about it--
can I harken back to my opening testimony about the challenges 
and the threats that we face these days? As I mentioned, I 
served, obviously, in a part of the world where those 
challenges were very evident. Tanzania is a country that knew 
terrorism all too painfully.
    One of the things that was very clear is that poverty does 
not cause terrorism. That is something that we need to repeat 
over and over again. However, destitution, abject poverty can 
lead to despair. And despair is a condition, sadly, that all 
too often extremists know how to exploit.
    Where we can be part of institutions and initiatives that 
are working to create opportunity, to address those conditions 
that can lead to despair, we are most definitely enhancing our 
national security, we are most definitely involving ourselves 
in poverty relief, so that we are not only addressing the 
conditions but that we are being seen as doing so, which is 
very good for our image around the world and the alliances that 
we seek to build.
    When we step back from these multilateral institutions, 
which, as Congressman Frank pointed out, are sometimes able to 
operate in parts of the world where, for a variety of political 
reasons, it may be more difficult for to us operate, we are 
seen as being less engaged in taking on those challenges. And 
there is, simply put, no way that that enhances our security. 
Removing ourselves creates a void in a vacuum for players, 
state players and non-state players, to be more engaged. And I 
think history shows us that can be a dangerous situation for 
us.
    So we are talking about preventing conflict, we are talking 
about addressing conditions that can lead to conflict. To me, 
that is as smart a national security investment as we can make.
    Chairman Miller of California. Thank you.
    Mr. Runde, if we don't fund the GCIs, what would the impact 
be to the various banks? And the comment by Mr. Green, the 
consequence of losing our leadership position in the banks, how 
would that--do you agree with that?
    Mr. Runde. There will be very negative consequences for the 
United States if we don't participate. We are going to, as I 
said, lose de facto control over these institutions. We are 
exploiting an American form of globalization through these 
institutions. And to the extent that we lose control over these 
institutions, the kinds of messaging, the kinds of policies 
that these institutions export are going to change. We are 
going to move from a Texas Hold 'Em rules of the game to, 
perhaps, Chinese Mahjong rules of the game, in terms of the 
sorts of rule sets that are going to be exported from these 
multilateral development banks over time--not immediately, but 
over time.
    So I think we have to be very cognizant of the fact that we 
are on the knife-edge of control of a lot of these 
institutions. We do have to use our diplomatic voice, we have 
to persuade, but, overall, we continue to have control over 
these institutions.
    In the case of the Inter-American Development Bank, we 
spend a lot of time in the United States worrying about how we 
should engage with Latin America and how we can be 
constructive. To the extent that we are cutting back 50 percent 
on the lending that the IDB is going to do as a result of us 
not participating, it is an extremely bad signal. People really 
follow the goings-on of the Inter-American Development Bank in 
Latin America, and so to the extent--we may not hear about it 
here, but they will certainly hear about it there, and it will 
have a very negative impact on our personal brand, in addition 
to what I described in terms of the implications for situations 
like Haiti.
    In the case of the African Development Bank and in the 
World Bank, those shares are going to come up for sale. There 
are willing buyers to buy those shares, and the negative 
impacts that I described earlier. And I think we will lose 
control over the World Bank presidency if we are not careful.
    Chairman Miller of California. I don't have time to ask Mr. 
Murphy a question, but maybe later. Mrs. McCarthy for 5 
minutes.
    Mrs. McCarthy of New York. Thank you, Mr. Chairman, Mr. 
Runde and Mr. Murphy also. Each one of you has talked about 
what the consequences would be if we do not pay our fair share 
and to stay ahead of it, and yet no one really mentions 
outlays. What countries are you talking about that might take 
over?
    Mr. Runde. I think that certainly China has expressed 
interest in buying shares of the African Development Bank, that 
basically they have been--
    Mrs. McCarthy of New York. So let's give it a--what would 
you think is an example if China took over that would be 
different than the way we run the banks? I will open that up to 
everybody.
    Mr. Runde. I will take a stab at that. I think the things 
that we have pushed, for example, labor and environmental 
standards that we have exported through the World Bank and 
other multilateral development banks, that we have helped 
perfect here in the United States and that are exported through 
these institutions, I think we could expect that those sorts of 
standards would get a lot less emphasis.
    I also think the sorts of safeguards around corruption or 
around laying the groundwork for better governance or 
responsiveness to public--I am not saying democracy building 
per se, but sort of setting the table for democratic reforms 
and being responsive to--being more responsive to the societies 
that a government serves, I think those sorts of reforms that 
the multilateral development banks export would be certainly a 
lot less emphasized.
    Mrs. McCarthy of New York. Mr. Murphy, what would the 
atmosphere be for our American businesses that are exporting if 
we lost our leadership with the banks?
    Mr. Murphy. I think Mr. Runde's comment about the Inter-
American Development Bank is very appropriate. If you look at 
the profile of American exports today, Latin America last year 
purchased 3 times as much goods as China. This is an incredibly 
important market for us. The Inter-American Development Bank is 
by far the most effective Pan-American institution. It is 
respected across the hemisphere. It does things that really 
matter, and at a time when in the past decade, U.S. exports to 
South America grew twice as fast in the past decade as our 
exports to Asia did, we need to be seen as leading the way 
within that institution and funding its efforts which are still 
incredibly important in terms of investments in infrastructure 
and education and in other programs.
    Mrs. McCarthy of New York. One of the things I think we as 
Members of Congress struggle with is how to explain to our 
constituents why this is so important, especially with the 
economy problems that we are seeing here in our country. So, in 
everyday language, not Washington language, how would you give 
the best argument on why this is important to the United 
States, why it is important for jobs and for our workers, and 
why it is important that we pay our dues, because it is very 
hard to explain to people why many of us support these issues?
    Mr. Debevoise. Thank you, Congresswoman, for that question. 
I will try and do it in three or four short sentences for you.
    Jobs depend on U.S. economic growth. U.S. economic growth 
is tied to exports. Increased exports need stable markets. 
These institutions contribute to the establishment of stable 
markets for U.S. exports that create jobs.
    Mr. Mark Green. Thank you, Ranking Member McCarthy. I guess 
I will try to take it a step further. As I harkened to earlier, 
history shows us the developing countries, as they emerge, 
reflect the values and institutions of those that assisted them 
along the way. The World Bank, the MDBs, as well as our own 
bilateral assistance, economic assistance, is vital in helping 
many of these nations develop the kinds of institutions that 
are friendly to American involvement, including business 
investment.
    On top of that, we talk a great deal about the importance 
of trade and exports in keeping our economy growing. We need to 
remember that a large percentage of the projected export 
opportunities, growth opportunities, in this world for American 
businesses are in the developing world. In many parts of the 
developing world, they do not yet have the fully developed 
rules and institutions that would protect the kinds of things 
that American entrepreneurs are looking for in terms of their 
investments: private property ownership, well established; 
greater transparency; capitalist values in terms of bids for 
business; and rule of law and predictability. All of those 
things are vitally important if American capital, American 
business, is going to make investments in those markets. These 
institutions, and our support for these institutions, can 
facilitate that, which will lead to job creation.
    Mrs. McCarthy of New York. Thank you very much. I yield 
back.
    Chairman Miller of California. Mr. Dold, for 5 minutes.
    Mr. Dold. Thank you, Mr. Chairman.
    As all of you probably know, Argentina has completely 
disregarded international agreements and obligations with 
respect to the World Bank's international arbitration 
decisions, and Argentina has also not shown any improvements in 
counterterrorism and counternarcotics cooperation. For many of 
us in Congress, these are major problems that would seem to 
warrant American opposition to any MDB projects for Argentina. 
I am pleased that during our last hearing, the Administration 
announced that they would not be supporting Argentina, and has 
done so. But more generally, I think many of us are concerned 
not just with Argentina, but with any country that violates its 
international obligations, actually receiving MDB funding.
    So the question I have for the panel: Do any of you have 
any suggestions about how we here in Congress can legislatively 
ensure that we are not violating or not voting in favor of MDB 
funding for countries like Argentina who violate their 
international agreements?
    Mr. Murphy. If I may, thank you very much for that 
question.
    Over the past 40 years, the United States has negotiated 
bilateral investment treaties to protect U.S. investment abroad 
with more than 40 countries, and in that time, governments have 
respected arbitral awards under those treaties in virtually 
every instance, until recently in the case of several cases 
relating to Argentina. It is very worrying and it calls into 
question the respect globally for these kinds of rules which, 
in fact, are embedded in more than 2,000 treaties worldwide.
    So from the perspective of the business community, we are 
pleased that the Administration has taken this step that you 
have mentioned, that they are using this lever of influence to 
convey that concern, and we would encourage that to continue in 
the future.
    Mr. Dold. Okay. Specifically, first of all, Mr. Debevoise, 
thank you so much for your answer to the ranking member. Very 
concise, and certainly one that we can use back at home when we 
are talking at town hall meetings as to why in the world we are 
spending money abroad.
    But if I can ask you, Mr. Debevoise and Mr. Runde, to 
comment, what can the MDBs do to ensure that environmental and 
social safeguards and transparency remain part of the MDB 
philosophy, and what would you say to those who say that the 
MDBs aren't doing enough to promote environmental and social 
safeguards in those countries in which they operate?
    Mr. Debevoise. Thank you for that question, Congressman.
    On the transparency front, I think that the World Bank has 
advanced hugely with the new disclosure policy. It is a 
difference of night and day, and I think that is a development 
that should not go unnoticed. We had an earlier question about 
what happens if we forfeit our leadership. I can tell you that 
the transparency policy that was adopted at the World Bank 
would not have happened under a situation with other strong 
voices on that board.
    And in the environmental and social safeguards area, I 
think the Bank today really is a leader, both in the private 
sector and in the public sector sides of the Bank. Commercial 
banks around the world do not make loans to sensitive, natural 
resource projects today without applying something called the 
equator principles which were developed at the IFC, part of the 
World Bank Group. We also have now very vigorous oversight in 
this area through the inspection panel mechanism, another 
mechanism that was strongly promoted by the United States and 
for whose independence we stand up regularly.
    So there are always going to be constituencies who feel 
aggrieved by particular projects, but I believe that the 
standards that are being developed and applied now are, in 
fact, quite robust and are the world leaders.
    Mr. Runde. I would just echo what Mr. Debevoise said about 
the standards. I think--I was going to mention the equator 
principles which, as Mr. Debevoise mentioned, were devised at 
the International Finance Corporation, and which if you want to 
do any sort of project finance investments in developing 
countries, they require meeting these equator principles, and 
so there are dozens and dozens of international banks that are 
signatories to these standards.
    And then if you want to do any sort of significant 
infrastructure investments, say, hydroelectric dams or other 
sorts of infrastructure, there are all sorts of significant 
environmental and other sorts of social hurdles that have to be 
looked at before those sorts of projects go through. I think 
that has been a direct result of U.S. leadership in asking hard 
questions. So I think having U.S. leadership has been very 
important, seeing those sorts of standards be put in place and 
enforced.
    Mr. Dold. Thank you very much. Mr. Chairman, I yield back.
    Chairman Miller of California. Thank you. Ms. Moore is 
recognized for 5 minutes.
    Ms. Moore. Thank you so much, Mr. Chairman.
    A big concern that this committee has raised is about the 
current debt situation and expenditure, the unwillingness on 
the part of many of our colleagues to make the 1 percent 
expenditure for these foreign investments. So, given that, I 
guess I want to ask, and I will start out by asking Mr. Runde, 
I was looking at your--I am sorry, Mr. Murphy--from the 
statement of the U.S. Chamber of Commerce, to share with us 
what the multiplier effect is for the investment in these MDBs 
with respect to the small amounts that we invest?
    And also, I wanted to ask Ambassador Green, who has been a 
member of this body, what we could say to the Majority party, 
who are Republicans right now, about the scoring of these 
investments and tell us a little bit about--and anyone else on 
the panel who might want to share in this--the difference in 
the callable capital, which is not scored and the paid-in 
authorization request. For example, the World Bank 
International Bank for Reconstruction and Development, the 
callable capital investment, the U.S. share would be $9.78 
billion, and then the callable capital, which is not scored, is 
$9.19 billion, and then the paid-in authorization request is 
$587 million over 5 years, $587 million over 5 years which is a 
little--it is about $115-or-so million a year in 5 years. That 
would be the investment.
    So I guess I want you guys to comment on whether or not 
this is a bang for the buck we might be able to sell to our 
colleagues in the Majority with respect to the investment 
opportunities this presents.
    Mr. Murphy. Thank you for the question.
    With regard to the multiplier effect in my written 
testimony, I was referring--I was reflecting on how the World 
Bank Group, since its creation in the aftermath of World War 
II, has been able to provide nearly half a trillion dollars in 
financing for development projects around the world and was 
able to do this with a U.S. investment of just $2 billion in 
its capital base. That is a remarkable accomplishment, if you 
do the math. That is $25 in additional contributions from 
around the world for every one U.S. taxpayer dollar that went 
into it. We consider that an excellent investment.
    And if you consider how the Bank's work has helped cut the 
mortality rate of young children in half in developing 
countries, reduce by half the proportion of people living in 
poverty, it is a remarkable record, and that is absolutely an 
investment in markets that are helping to drive American 
exports today.
    Ms. Moore. Ambassador Green?
    Mr. Mark Green. Thank you. And I may not be the best 
qualified to go over the details of the scoring and break it 
down for you, but what I can say is, as we all know, we are 
sometimes victims of our own scoring rules. And I think one of 
the things that we have to remind ourselves is that regardless 
of which party we are talking about, and where our leaders come 
from, everyone agrees that a growing economy is the most 
important single goal that we can pursue in terms of providing 
the revenues and the good-paying jobs. Every economist will 
tell you that increasing exports is a vitally important part--
in fact, it is an absolutely necessary part--of any growth 
strategy that the United States will undertake.
    These contributions help us in two ways. First off, they, 
for a modest investment, allow us to receive a much greater 
benefit because of the burden-sharing, the fact that we pay 
only in a portion for the benefits that are put out.
    But secondly, and I come back to it, for our job creators 
to be able to invest overseas, to export overseas, to be able 
to be involved overseas, there are certain foundational needs 
that they have. Investment in the World Bank facilitates those 
conditions that all of our entrepreneurs need in order to make 
any of the export opportunities meaningful.
    When you ask exporters why they aren't able to go into 
certain countries in Africa, they will tell you it is because 
of a lack of a rule of law, unpredictability, insufficient 
transparency. The rules that the World Bank fosters, 
facilitates, and in some cases makes an absolute precondition 
of any loans that they make, are absolutely in our interest, in 
our governmental interest, but more importantly, in the 
interest of our job creators.
    Ms. Moore. Thank you, Ambassador. Just a follow-up. Do you 
all agree that--I think that the example I gave was World 
Bank's International Bank for Reconstruction and Development, 
where the U.S. share is $9.78 billion, and the callable capital 
is $9.19 billion. Has there ever been an instance that any of 
you know of where that callable capital has had to be paid?
    Mr. Debevoise. Congresswoman, the answer to that question 
is no, not since 1945 has there ever been a call on the 
callable capital.
    I referred earlier today to the prudent financial 
management of these institutions, and this is an example of 
that. There is 6 percent that is actually paid in, in this 
capital increase and 94 percent which is callable capital; yet 
we are able to leverage. I know there are times in this 
committee where the word ``leverage'' might be a bad word, but 
this is leverage that is very prudently managed, and one of the 
consequences of dipping below 15 percent voting power in the 
World Bank would be that we would lose the ability to veto 
amendments to the articles.
    One of the key articles is the article that says that the 
callable capital is only available to pay bondholders if the 
bank defaults. The callable capital cannot be called just 
because the bank wakes up one day and says we want some more 
money. If we lose that 15 percent, the credibility in Wall 
Street and the capital markets of the world will be at risk.
    Ms. Moore. Thank you so much. And thank you, Mr. Chairman, 
for your indulgence.
    Chairman Miller of California. Mr. Huizenga for 5 minutes.
    Mr. Huizenga. Thank you, Mr. Chairman, I appreciate it. 
Ambassador Green, it is good to see you again, and I just want 
to start off by saying thank you. I appreciate your leadership 
on some of these issues, and I know you had a chance to travel 
extensively with my predecessor into Africa and other places as 
well. I am a firm believer, though, that every garden party 
needs a skunk, and I just want to kind of pursue a few things.
    I am one of those people who is concerned about the outlay, 
the exposure that the American taxpayer has, and I understand 
some of my colleagues haven't met a spending program they 
haven't liked in the past, but these are uncharted territories 
that we are in, not just here in the United States but with the 
world economy. And it strikes me that we are trying to do two 
things here, or at least the explanation seems to be doing two 
things: one, deal with aid; but two, talking about business 
investments.
    And I am just--I am concerned with the world economy as it 
is. Can we really expect that there are not going to be any 
defaults? I know you had just said that there have not been, I 
believe you said, since 1945 at least, a callable situation 
where those loans could be called. This $7.5 billion direct 
investment is about $36 billion, according to my math and 
numbers that I have, in potential exposure for this government 
and for our taxpayers.
    And going back to my colleague from Illinois, his question 
to Mr. Murphy, it seemed to me he didn't really answer the 
question about how can we be assured that our tax dollars are 
not supporting governments that are problematic to us as we are 
moving forward. And, again, these tend to be nonbankable 
projects, right? That is, they can't go out and get traditional 
bankable paper. They can't get traditional backers. What is the 
assurance that these really are positive projects that we need 
to be involved in?
    So I open it up to any of you for a quick follow-up. And 
Mr. Murphy, I would like to hear specifically from the Chamber 
on that, too.
    Mr. Debevoise. Thank you, Mr. Huizenga. It is a skunk's 
question, but fortunately, I don't sense the odor, because the 
answer is quite positive in that regard.
    The Bank has a long history of lending. It started lending 
to France after the Second World War and now lends in other 
countries. At the moment, there is one country in default to 
the World Bank: Zimbabwe. Argentina has paid everything, all of 
the other countries that you might think of that have had 
difficulty. That is because the Bank has a preferred creditor 
status, and it is recognized as such. Now, that is a de facto 
recognition. It is not a formal legal seniority, but it works.
    When I sat on the World Bank board and looked at the 
financials every year, I was always asking, is the loan loss 
reserve large enough? And the experience has been stellar. The 
defaults have been limited to cases where countries have 
literally been destroyed by civil war or things like that. But 
this institution, and the others as well, have very strong 
reserves to cover that type of situation, and it is something 
that is looked at very closely by the rating agencies which 
continue to rate the institution as AAA.
    Mr. Huizenga. I have 1 minute here, and I know I want to 
get a couple of other answers, but have we not redefined that 
debt in the past? Have we not restructured that?
    Mr. Debevoise. I think what you are referring to is debts 
that were incurred by IDA countries, not by IBRD countries. 
That is what MDRI, the Multilateral Debt Relief Initiative, is 
all about. Those are the poorest of the poor countries, with 
per capita income below $1,300 a year of GNI; but IBRD 
countries, it is a completely different situation. There has 
never been any debt relief for an IBRD borrower.
    Mr. Huizenga. Mr. Murphy?
    Mr. Murphy. My response is perhaps not as satisfactory as I 
would like it to be, but if the United States does not make 
these investments, then we lose the ability to be influential 
in the councils of how these decisions are made within the 
multilateral development banks. If you look around the world 
today, particularly in Africa, you see that Chinese investment 
and direct assistance is increasingly important. It is often 
tied to the development of natural resources in that country. 
The alternative to our investments and increasing the ability 
of the multilateral development banks to be influential in the 
developing world is most likely to see more activism on a 
direct bilateral basis by rising powers such as China.
    Mr. Huizenga. I appreciate the chairman's charitable clock 
time here, but I guess I need to leave with this: Have there 
really been any successes in changing these corrupt 
governments? I think it was Mr. Runde earlier who talked about 
Haiti. One of the problems with Haiti as I have been reading--I 
have not visited there, but it is one of the things I have been 
reading--is the rampant corruption that is continuing to go on 
there, and how is that not an exposure that we should be afraid 
may come back and haunt us?
    Mr. Runde. Thank you for that. I do think that in some 
context, there is a national security component to what we are 
trying to do. I think in the case of Haiti, which is unique I 
think for a number of reasons, I think we have to think about 
the counter factuals. If we don't prop up that government, do 
we really want several hundred thousand people getting on boats 
and coming to Miami? I think that is the cost. We have to 
choose what sort of an outcome we want. So I would say that in 
the case of Haiti, that is sort of in the background.
    I think in the case of other countries, have we seen 
countries reform over time? Absolutely. I think about countries 
like Chile or South Korea or Ghana or France that were all 
recipients of World Bank loans over time and participated in 
reforms that were American-influenced. And so, yes, absolutely, 
we see countries graduating from foreign assistance over the 
last 20 or 30 years. South Korea is now a donor. Chile is about 
to become a donor. Brazil is about to become a donor. So these 
are examples.
    Not all countries are doomed to failure, but I do think it 
is very hard to go back home--when I come home for 
Thanksgiving, I talk to my parents around the dining table, who 
don't follow foreign assistance and aren't really that 
interested in it and are kind of skeptical about it. I think 
there are sort of four arguments that we have to make for why 
we have to be a participant in this.
    One is, this is about stable and growing markets. This is 
about who buys our goods and services. The second is national 
security. In many country contacts, we are fighting insurgents 
where we need our host country partners to demonstrate that 
they can provide public goods and services, and the MDBs play a 
crucial role in that. So places like Iraq and Afghanistan or 
places like Haiti, where we have failed governments, we are 
helping to prop them up, and these institutions stay longer 
than sometimes the American people have the stomach for 
staying. And so they are built to last. They are built to stay 
beyond our ability to stay or sort of help the local process, 
willing to let them stay. If we don't do this, someone else 
will is the third argument. It is not as if we take our bat and 
ball and go home. There are other folks waiting in the wings to 
offer an alternate vision of globalization which isn't one that 
is favorable to the United States of America. And then if we 
want to be leaders of the free world, we have to pay to play, 
and if we don't do this, this is a downpayment on American 
decline.
    Chairman Miller of California. Mr. Huizenga, I would like 
to show you a testimony by the Admiral, sent by the Joint 
Chiefs of Staff, very informative, and that is the first time 
the Joint Chiefs have ever sent a witness to this committee. On 
national security issues that they have been really involved 
with and benefit from, it is very informative.
    I had expressed and apologize for mispronouncing your name, 
but I corrected it.
    Mr. Huizenga. That is all right, Mr. Chairman.
    Chairman Miller of California. Mr. Green, you are 
recognized for 5 minutes.
    Mr. Al Green of Texas. Thank you, Mr. Chairman, and thank 
you for allowing me to be a part of this hearing. I thank you 
and the ranking member because this has been very informative 
and I think very beneficial.
    I would like to thank all the witnesses for your testimony. 
I tried to follow it. I had to step away for a moment, so my 
question may be repetitive in that it has already been 
addressed, but I would like to speak for just a moment to you 
about the foreign markets for U.S. companies. I have 
intelligence indicating that half of the global growth is 
expected in developing countries, and that we are talking about 
$3 trillion in infrastructure spending.
    Would one of you kindly elaborate and give some indication 
as to how this will impact the ability of U.S. companies to do 
business and how that business will impact the U.S. economy?
    Mr. Murphy. Thank you very much for that thoughtful 
question. Last year, over half of U.S. exports went to 
developing countries for the first time in a number of years. I 
think this is a reflection of the fact that you just pointed 
out, that developing countries are growing more rapidly than 
the developed markets. You see a situation where countries such 
as Brazil have literally tens of millions of people making a 
transition from a level of income where they are shopping in a 
local market to where they can go to a supermarket and buy 
processed goods. They can buy shampoo. They are joining a 
consumer culture to a degree that is raising their living 
standard, and these are markets where U.S. companies and their 
products, their goods and services, are very much in demand.
    What we at the U.S. Chamber hear from our members is an 
incredible level of interest in some of these large emerging 
markets such as Brazil and India, Indonesia, and very much so 
in Africa as well, and a number of African countries are 
graduating from being so-called frontier markets to countries 
that are growing, in some cases, by double digits, double-digit 
income growth, and at a time when demand is slack here in the 
United States, the housing crisis has kept the U.S. consumer in 
a, shall we say charitably, restrained mode, this is very 
welcome to American companies, and it is going to be crucial to 
our recovery.
    Mr. Al Green of Texas. Thank you. Let me move to another 
area that is somewhat esoteric. I would like for you to address 
the currency of choice for the MDBs. Is it the American dollar? 
Is that the currency of choice, generally speaking?
    Mr. Debevoise. Congressman, thank you for that question.
    Mr. Al Green of Texas. May I just share that the reason I 
ask is because many people are not aware of the currency 
challenges that are out there in terms of a desire to move into 
new currency. There is currencies of choice, ``competition'' is 
a better word with the euro, competition with the yuan. That is 
why I am asking, because I want to know how our currency is 
faring in terms of being promoted. The American dollar is 
important to the American economy as a currency of choice.
    Mr. Debevoise. Thank you, Congressman Green.
    The answer to your question is that at the World Bank, the 
U.S. dollar is the currency of account, and all of the accounts 
are maintained in U.S. dollars in terms of the formal 
reporting, and most of the borrowing is hedged back into U.S. 
dollars. That portion which is not is because there might be a 
disbursement in some local currency, but for the most part, it 
is a dollar-oriented institution.
    Mr. Al Green of Texas. And the second part of this question 
deals with our lack of voting privileges. Would that then put 
us in a position such that we cannot continue to influence our 
model as a currency of choice for the Bank? Do we lose 
something if we are not--I hate to use the terminology that has 
been used--but we are not playing by contributing, if I may say 
so?
    Mr. Debevoise. Congressman Green, I think the question has 
been asked, and the influence of the United States is very 
important for maintaining something like that in the 
institution, in all the institutions, frankly.
    Mr. Al Green of Texas. Finally, with the few seconds left, 
you mentioned the hard-loan window versus the soft-loan window, 
and for a neophyte, those are terms that I can draw some 
conclusions about. But could you just for a moment explain a 
little bit more about the hard loans versus the soft loans in 
terms of how they benefit countries?
    Mr. Debevoise. What we are talking about is categories of 
countries. Countries with per capita GNI, gross national 
income, above approximately $1,300, borrow from the hard-loan 
window, and they pay interest at a roughly market rate. 
Countries with per capita GNIs below that level deal with the 
soft-loan window. In the case of the World Bank Group, that is 
called IDA. In the African development group, that is called 
the African Development Fund, and similarly in Asia.
    And the terms that they get are a mixture of outright 
grants and loans which--
    Mr. Al Green of Texas. Let me interrupt you to say, I will 
ask you to explain it to me afterwards. We are over my time, 
and I am an interloper. Mr. Chairman, thank you. I will get my 
answer.
    Chairman Miller of California. Thank you. I want to thank 
the panel. You have been excellent. Your testimony is very, 
very good. I want to thank Ambassador Green and Mr. Runde for 
their patience. They came for the last hearing, and they were 
here ready to go, but it was canceled at the last moment. So I 
thank you for coming back again today and giving us your time 
and all of your talents.
    Without objection, I submit the following for the record: a 
letter from the Bretton Woods Committee urging strong support 
for the Administration's request for general capital increases 
for the MDBs. The committee writes: ``It is important to 
sustain global leadership and influence in the MDBs in order to 
promote U.S. national security interests and advance U.S. 
business opportunities abroad. Former Presidents George Bush, 
Jimmy Carter, honorary co-chairs of Bretton Wood Committee.''
    This letter is signed by 14 of the committee's members 
including Nicholas Brady, Henry Kissinger, Lee Hamilton, Paul 
O'Neill, Jim Kolbe, and Brent Scowcroft.
    With that, the hearing is adjourned. The Chair notes that 
some members may have additional questions for the panel which 
they may wish to submit in writing. Without objection, the 
hearing record will remain open for 30 days for members to 
submit written questions to these witnesses and to place their 
responses in the record.
    This committee is adjourned.
    [Whereupon, at 3:57 p.m., the hearing was adjourned.]






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                            October 4, 2011




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